Companies finding privacy strengths give a competitive edge

Just as a decade ago, the idea of online social networks connecting hundreds of millions of family members, strangers and friends across the globe in split seconds seemed far-fetched at best. Even search engines could not deliver today's at-a-click results to every imaginable query, and the thought of unlimited e-mail storage capacity in a virtual cloud was hardly the topic for discussion around the dinner table. Similarly, the phrase "online privacy" was not what the public was thinking about.

A lot has changed in recent years, however, as privacy experts, corporate strategists and marketing firms alike have come to see the potential for privacy strengths--strong policies, data safeguards and built-in protections for users--as a market differentiator or, in some cases, even a competitive weapon.

Future of Privacy Forum Co-Chairman and Director Jules Polonetsky, CIPP, notes that while there have long been indications that companies might compete on privacy, it clearly wasn't the primary thought on the minds of marketing departments immersed in promoting new features or addressing risk issues.

"In the last year or two it has taken an enormous jump in mindshare...It has crossed the cultural gap," he says, adding, "We're seeing this on the Hill as well," where multiple privacy bills have been introduced before the current U.S. Congress.

Former Facebook Chief Privacy Officer Chris Kelly also weighs in on this evolution in privacy protection beyond addressing customer concerns and meeting legislative requirements to a market differentiator.

"Privacy--giving individuals control over the context in which they share information--is absolutely a competitive advantage," Kelly says, suggesting, "Facebook's pioneering controls gave it a huge long-term advantage over MySpace and other earlier social sites, as well as over sites solely collecting data through search and other methods where average consumers would presume that data is collected anonymously. There are many in the media and in some parts of the activist community who see any collection of data as problematic and attempt to portray all online sites as rapacious consumerists sneaking their way into peoples' brains. To be sure, there are bad actors who use deceptive techniques, and they should be actively ferreted out through the use of existing consumer protection legislation and targeted new government action."

But, he notes, "Actions by those seeking to protect consumers must take into account both technological evolution and the value to the consumer economy of allowing people to make their own decisions about services that bring them value. Where consumers willingly share data in a permissioned way and have reasonable control over it, we should be encouraging greater transparency but also protecting innovation that serves consumers."

Asked about the importance of privacy as a differentiator, Google's Chris Gaither notes, "At Google, our business depends on protecting the privacy and security of our users. If they don't trust us, our users will simply switch to competing services--which are always just one click away. That's why privacy is something we think about every day, across every level of our company."

He explains that, with such privacy tools as its Ads Preference Manager and Gmail's session-wide SSL encryption by default, "We focus on privacy protection throughout the life of our products, starting with the initial design. We subscribe to the view that by focusing on the users, all else will follow."

Using the example of prominent Web browsers embracing do-not-track technology in version updates, Polonetsky describes a shift in the way some in industry think about privacy--from believing that those concerned with privacy were on the fray to an understanding that, across ever-widening circles, when data protection and privacy are not handled properly, "What I do with data is starting to be discussed as if I'm a polluter."

Looking at the indications of such trends on the privacy landscape overall, Kelly says, "I think there is finally some more sophistication in the media and among consumers about what the rise of the Internet has meant for data collection and the operation of computers and mobile devices across the world. The Wall Street Journal's series on 'What They Know,' detailing many of the actual as opposed to imagined or feared practices of various websites, was a watershed moment, and I hope will lead to improvement in the generally poor state of reporting on privacy."

When it comes to other recent media reports of instances where parties levied privacy criticisms against their competitors to gain public support, Polonetsky notes that major players have long sought to differentiate based on their successes or the shortcomings of their competitors. But, he suggests, it is important to be aware of the old adage about a lowering tide sinking all boats.

For example, he explains, if consumers are concerned about online tracking for behavioral targeting, they are likely to be concerned about all companies that might partake in such business practices, regardless of which specific company might be targeted for negative practices.

"There are certainly limits on how far companies should go in attacking competitors," Kelly suggests, "but privacy should be a legitimate ground for differentiation."

Polonetsky notes that progress happens as individual companies come up with creative improvements and others follow suit, highlighting the importance of such innovation and creativity, but he adds that to move forward on privacy protection, "Industry needs to band together to create a unified message."

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